Earnings per share were $0.54, over two-and-one-half times the $0.20 reported for the year-ago quarter and 26% above the third quarter’s $0.43, excluding the realized gain on an investment sold during the third quarter. All financial information in the text of this release refers to pro forma results, which exclude investment gains and acquisition-related expenses.
Analog Devices experienced an exceptionally strong fourth quarter, well ahead of the expectations we communicated at the time of our third-quarter release, said Jerald G. Fishman, President and CEO. Demand continued strong throughout the quarter, with our production levels rising in response to demand. As a result, revenues increased to $806 million, 87% above the prior year’s fourth quarter and 15% greater than the immediately prior quarter.
ADI’s full-year revenues grew 78%. Analog products revenues increased 68%, while DSP products revenues rose 115%. Our revenue growth was well ahead of the market’s growth, both for the year and our fourth quarter. Based on these results, we believe ADI has become the industry’s fastest-growing analog and DSP IC supplier, as signal-processing technology plays an ever-more important role in communications, digital infotainment, computer and industrial applications.
Commenting on the fourth quarter’s financial performance, Mr. Fishman said, Gross margin increased to 58.6% of sales, up 640 basis points from the prior year’s fourth quarter and up 150 basis points from the third quarter. Our improving gross margin ratio was once again the result of the value ADI technology brings to its customers, combined with record-high operating levels and the success of our cost reduction programs. Our higher gross margin, coupled with continued improvement in our operating expense ratios, resulted in our operating margin ratio increasing to 34.3% of sales, compared to 20.9% for last year’s fourth quarter and 31.3% for the immediately prior quarter.
Our balance sheet also continued to strengthen during the fourth quarter. Inventories and accounts receivable both declined in days and cash flow was strong.
Fiscal 2000 was a great year for Analog Devices, Mr. Fishman noted. It turned out far better than we had anticipated early in the year, not only in terms of revenue and profit growth, but equally important, in setting the stage for Analog Devices to achieve what we believe can be solid revenue growth over the next few years.
Given our high backlog and strong new orders during the fourth quarter, we believe we can achieve 7 to 10% sequential revenue growth in the first quarter of fiscal 2001. Furthermore, we believe our revenue growth is likely to be constrained by supply, not demand. At this level of revenue, we believe the first quarter’s EPS could be in the range of $0.58 to $0.60.
Our first look for the entire year of fiscal 2001 is also very encouraging, Mr. Fishman concluded. We currently believe that fiscal 2001’s revenues could exceed fiscal 2000’s by more than 50%, which would result in fiscal 2001 revenues of more than $3.8 billion.
